Inside Asian Gaming

Galaxy Entertainment Group and Sands China are locked in a tussle for the second spot in Macau’s market share rankings. The city’s previous monopoly operator, SJM, has managed to hang on to the largest share (inflated by its 14 “satellite” operations from which it derives only a small proportion of earnings). Capacity appears to be one of the major determinants of who’s on top. Following the May 2011 opening of its Galaxy Macau megaresort on Cotai, GEG moved ahead of Sands. But the latter was able to reclaim its position with Sands Cotai Central, which opened in phases in April and September of last year. In Q2 2012, GEG commanded a 21.2% share of Macau casino revenue while Sands China had 17.3%. By the same quarter of 2013 their relative shares had flipped to 18.8% and 20.7%. Come mid-2015, GEG is likely to not only once again overtake Sands, but also SJM, with the completion of Phase 2 of Galaxy Macau, which is set to kick off the much anticipated “second wave” of Cotai resort development. From there, the company is well-positioned for future development with the biggest land bank on Cotai at 2 million square meters, and, if it continues building its mass-market business at its current pace, stands a good chance of becoming by every measure the No. 1 operator in the largest casino market in the world. Francis Lui has done so well holding his own against international stalwarts Sands, Wynn Resorts and MGM Resorts 2 Francis Lui Deputy Chairman Galaxy Entertainment Group International that it’s easy to forget he has less than a decade of casino operating experience. It’s also somewhat ironic that GEG and Sands, the two companies tipped as most likely to grab the lion’s share of the market in the near future, owe their very presence in the city to each other. In fact, they were originally supposed to be partners. In 2001, when the Macau government decided to introduce foreign competition to the local casino industry, it opened a tender for three gaming concessions, which unlike the two single-property licenses subsequently offered in Singapore, would allow concession holders to develop a potentially unlimited number of gaming venues in the city subject to government approval. SJM, Wynn and Galaxy Casino, comprising the Lui family’s Hong Kong development company and Las Vegas Sands, won the bidding. Although Sands had been keen to bid for one of the concessions, the city was then still an unknown quantity, and its casino industry was rife with murky associations and had a history of gangland violence. Sands may now be busily pouring billions into developing resorts in Macau, but it had originally intended to act merely as a management company and wanted an Asian partner to foot the investment bill. Furthermore, Sands wanted to ensure that should any problems arise that jeopardized its gaming license in Nevada, the partner could take over the concession. Sands’ search for a suitable partner eventually led it to Galaxy, an entity that would eventually come to be controlled by going to build a business with my vision.’” So it’s hardly surprising that processes and procedures, corporate hierarchies, legal and regulatory hurdles, diplomatic niceties, these are of little interest to him, and his businesses go through executives like his baccarat tables go through decks of cards. There’s the legendary pugnacious streak, a ferocity of will that often waits on men obsessed with the greatness of their schemes. At times, he’s seemed wired with an instinctive switch to attack mode, born perhaps of the hardscrabble childhood, in the face of any perceived hostility to his aims or to himself and the causes dearest to him. The Steve Jacobs imbroglio springs to mind, together with the US Justice Department and SEC investigations it has sparked—the libel suits and the relentlessness with which he has pursued them—the implacable hostility to organized labor, a major factor in the US in his princely support of the Republican Party over the years—and the staggering sums he spent to try to keep Barack Obama from returning to the White House, $100 million or thereabouts, more than any individual has been known to spend to influence any political campaign in the nation’s history. But then he’s never acknowledged limitations, and unless he’s given up on his capacity for surpassing himself, he isn’t likely to start now. The tenacity, the combativeness, they come with the territory. Without them, Cotai might never have risen from the swamps, a swimming pool wouldn’t be floating in a city park 55 stories above the streets of Singapore, Paris might never come to China or El Dorado to the Iberian plains. The Asian Gaming 50 – 2013 10 INSIDE ASIAN GAMING | September 2013